For nearly all acute care hospitals in the United States, a new mandatory payment model is on the horizon. The Centers for Medicare and Medicaid Services (CMS) has finalized the Comprehensive Care for Joint Replacement Expanded (CJR-X) Model, a mandatory, nationwide, episode-based payment model for lower extremity joint replacements (LEJRs) in Medicare fee-for-service (FFS). The CJR-X Model will begin January 1, 2028, as the first expansion of an episode-based payment model and the largest episode-based payment model in Medicare’s history.¹

The CJR-X Model is an expansion of the original CJR Model, which ran from April 2016 through December 2024. The expansion is grounded in the CJR Model's seventh annual evaluation report, which found that CJR methodologies produced $112.7 million in net Medicare savings across performance years 6 and 7 while maintaining quality of care.² The CJR-X Model builds on the CJR Model’s episode methodology while incorporating risk adjustment and other design improvements developed for the Transforming Episode Accountability Model (TEAM), which launched January 1, 2026.³

CMS finalized the CJR-X Model in the fiscal year 2027 Hospital Inpatient Prospective Payment System (IPPS) Final Rule. The final rule included very few changes to the CJR-X Model as initially proposed. The most salient change was to move the CJR-X Model start date three months later than the proposed start date of October 1, 2027 (coupled with corresponding changes to measuring quality performance and setting target prices on a calendar year basis rather than a federal fiscal year basis). Unless otherwise noted, all information here describing the CJR-X Model comes from this final rule, which was published on August 4, 2026.⁴

What is the CJR-X Model?

The CJR-X Model will be a mandatory, retrospective, episode-based payment model with the following key aspects:

• Model length: An ongoing, national model. The first performance year will run from January 1, 2028, through December 31, 2028, with subsequent years aligning with calendar years.
• Model participation: All acute care hospitals in the 50 states, D.C., and U.S. territories that initiate LEJR episodes and are eligible to be paid under both the IPPS and the Hospital Outpatient Prospective Payment System (OPPS), except hospitals in Maryland and current TEAM participants.
• Episode types: A single-episode category—LEJR—covering inpatient hip, knee, and ankle replacements and outpatient hip and knee replacements. Outpatient ankle replacements were not included in the original CJR Model and are therefore excluded pending TEAM evaluation.
• Episode construction: All Medicare Part A and B services (with limited exclusions) beginning with the anchor hospitalization or outpatient procedure and ending 90 days after discharge.⁵
• Reconciliation: Annual reconciliation against regional target prices constructed from historical data and adjusted for market trends, beneficiary risk, hospital characteristics, and quality performance.
• Financial arrangements: Gainsharing with downstream providers is allowable, subject to quality and contribution requirements.

Which healthcare providers will be required to participate in the CJR-X Model and how will they be impacted?

Mandatory model and participation

Participation in the CJR-X Model will be mandatory for all eligible acute care hospitals nationwide, which is a significant expansion from the original model's selected metropolitan statistical areas (MSAs). Excluded hospital types include TEAM participants (for the duration of TEAM), hospitals in Maryland, Indian Health Service and Tribal hospitals, Critical Access Hospitals, Rural Emergency Hospitals, and hospitals in the Rural Community Hospital Demonstration. Once TEAM concludes, former TEAM participants that meet the definition for model participation will automatically become CJR-X Model participants (91 FR 148 50131).

Why this matters: The CJR-X Model will reach hospitals that have never participated in episode-based arrangements. The January 2028 start date gives hospitals more than a year to prepare, and many will have prior CJR or Bundled Payments for Care Improvement (BPCI) Advanced Model experience to draw from. However, hospitals new to bundled payments, such as rural and safety net hospitals that had the opportunity to opt out of prior models, may face preparation challenges.

Episode selection and length

The CJR-X Model will test a single episode category: LEJR. Based on 2021 Medicare claims data, LEJR was the highest-volume, highest-cost surgical episode in BPCI Advanced (91 FR 148 50136).⁶ Episodes will be identified using Medicare Severity Diagnosis Related Groups (MS-DRGs) 469, 470, 521, and 522 for inpatient procedures and Healthcare Common Procedure Coding System (HCPCS) codes 27447 and 27130 for outpatient procedures (91 FR 148 50139).

The episode length (90 days post-anchor) mirrors the CJR Model and differs from TEAM's 30-day window. CMS will explicitly test both lengths concurrently to compare their impacts on savings and quality, with the 90-day window offering broader accountability for care transitions but greater exposure to unrelated spending events (91 FR 148 50144).

Why this matters: The 90-day window will create more opportunity for savings through post-anchor care redesign than TEAM but will also result in more financial exposure. The concurrent testing of the CJR-X Model and TEAM could inform CMS's eventual view on optimal episode length.

How is performance measured under the CJR-X Model?

Financial structure

Target prices

CMS will construct CJR-X Model target prices from three years of weighted baseline episode spending data, trended forward to the performance year and set at the MS-DRG/HCPCS episode type and U.S. Census Division level. Benchmark prices will be calculated using all CJR-X Model-eligible hospitals in a given region, resulting in 36 benchmark prices across four episode types and nine Census Divisions (91 FR 148 50174–50175). Recent baseline years will be weighted more heavily (17%/33%/50%), and episode spending will be capped at the 99th percentile to limit catastrophic case exposure. The preliminary target price calculation is:

Preliminary target price = Benchmark price x Prospective trend factor x Prospective normalization factor x Risk adjustment multipliers x Discount factor

CMS will apply the following factors to benchmark prices to construct preliminary target prices, which will be provided to participants before each performance year.

Low-volume hospitals with fewer than 31 LEJR episodes in the applicable baseline period will not receive a preliminary target price and will not be financially accountable for that performance year, but their episodes will count toward meeting the low-volume threshold in future years (91 FR 148 50187).

Risk adjustment

The CJR-X Model will adopt the same risk adjustment methodology as TEAM, adjusting episode-level target prices at reconciliation based on hospital-level factors (safety net status, bed size) and beneficiary-level factors derived from a 180-day lookback period (age bracket, beneficiary economic risk, prior post-acute care use, disability status, procedure type, 22 specific HCC flags, and HCC count) (91 FR 148 50189-50190). Risk adjustment multipliers will be calculated prospectively and held fixed at reconciliation.

Reconciliation

Annual reconciliation of CJR-X Model performance years will occur approximately six months after each performance year-ends to allow for claims run-out (91 FR 148 50196). The reconciliation amount will be determined by:

• Comparing actual FFS episode spending against reconciliation target prices (preliminary target prices updated for performance year episode risk adjustment factors, retrospective trend and normalization adjustments, geographic wage factors, payment rule adjustments, and the quality-adjusted discount factor)
• Comparing actual FFS episode spending against reconciliation target prices (preliminary target prices updated for performance year episode risk adjustment factors, retrospective trend and normalization adjustments, geographic wage factors, payment rule adjustments, and the quality-adjusted discount factor)

CMS will also monitor post-episode spending. If a hospital's average spending in the 30 days following episode completion exceeds three standard deviations above the regional average, it will owe a repayment for the excess, not subject to stop-loss limits (91 FR 148 50204-50205).

Why this matters: The 2% discount factor reflects the reality that LEJR spending has already declined, and a lower discount is more sustainable for a permanent national model (91 FR 148 50184–50185). Regional target pricing means hospitals compete against peers rather than their own historical performance, which is more challenging for historically inefficient hospitals and more advantageous for those already operating efficiently. The comprehensiveness of the risk adjustment model is intended to reduce the financial penalty for treating more complex patients and give hospitals the ability to estimate episode-level target prices before the performance year begins. At reconciliation, hospitals that successfully invest in quality performance benefit twice: through lower episode spending and a reduced discount factor that raises the reconciliation target price. The post-episode spend monitoring adds a final layer of accountability, signaling that CMS plans to watch for care-shifting behavior even after the formal CJR-X Model episodes end.

Quality measures

CMS finalized five quality measures covering both inpatient and outpatient episodes. The CJR Model, in contrast, relied solely on inpatient measures. The updates reflect the fact that nearly three in four LEJR procedures now occur in the outpatient setting (91 FR 148 50147–50151).

CMS will assign each hospital's quality measure result to a performance percentile based on the national distribution of IPPS hospitals (91 FR 148 50163–50167). Unlike the CJR Model, the CJR-X Model will not reward year-over-year improvement; only absolute performance against the national distribution will be scored. CMS will aggregate individual quality measure scores into a Composite Quality Score (CQS), capped at 20 points, which determines both payment eligibility and the applicable discount factor that will be applied at reconciliation (91 FR 148 50168–50173):

Why this matters: High-performing hospitals will be able to improve their ability to earn a reconciliation payment by reducing their effective discount to zero. Hospitals in the "Below acceptable" category will not earn reconciliation payments even if their actual episode spending was below the target price (91 FR 148 50198–50199).

How the CJR-X Model will interact with TEAM & accountable care organizations (ACOs)

Hospitals currently participating in TEAM will be excluded from the CJR-X Model for the duration of TEAM, allowing CMS to directly compare 30-day versus 90-day LEJR episodes and avoid subjecting hospitals to conflicting methodologies across the two models (91 FR 148 50131–50133). When episodes overlap, whichever episode was initiated first takes precedence, and spending from the subsequent procedure is folded into the first episode. Once TEAM concludes, former TEAM participants that meet the CJR-X Model definition will automatically become CJR-X Model participants (91 FR 148 50131).

For ACO-aligned beneficiaries, CMS will allow a CJR-X Model episode to be initiated regardless of ACO alignment. The ACO settlement and CJR-X Model reconciliation will be conducted separately, meaning the ACO is not at risk for CJR-X Model reconciliation payments or repayments (91 FR 148 50206–50211). Any savings achieved by the ACO will remain with the ACO, and any savings generated in CJR-X will remain with the CJR-X Model hospital. ACOs with hospital participants could potentially achieve savings through both arrangements simultaneously, with the option to engage orthopedists through direct financial arrangements to share CJR-X Model risk.

Closing thoughts: How can healthcare providers succeed in the CJR-X Model?

The CJR-X Model represents the largest mandatory expansion of episode-based payment in Medicare's history and will extend LEJR accountability to every eligible acute care hospital in the country. CMS's approach draws on more than a decade of model testing, incorporating the risk adjustment sophistication of TEAM, the proven 90-day episode structure of the CJR Model, and a more sustainable 2% discount factor designed for the long term.

That track record offers important lessons for what lies ahead. Evaluation findings from the original CJR Model showed that orthopedic surgeon engagement and post-acute care coordination contributed to hospital success. Hospitals that established gainsharing agreements with surgeons and developed preferred post-acute care provider networks were better positioned to manage episode costs, while hospitals new to episode-based payment often needed additional time and support to implement effective care redesign strategies.⁷

Those lessons from the original CJR Model will be especially relevant for the many hospitals entering episode-based payment for the first time under the CJR-X Model. The model's nationwide scope means hospitals with no prior episode-based experience will be held financially accountable for 90-day LEJR episodes beginning in January 2028. Succeeding in the CJR-X Model will require managing post-anchor care relationships, understanding regional performance benchmarks, and investing in care pathway redesign for a procedure that now occurs predominantly in the outpatient setting..

This article is based on the CJR-X Model final rule published in the Federal Register on August 4, 2026 (Vol. 91, No. 148).

¹ Before CJR-X, there were only four certifications for potential expansion of CMS Innovation Center models, none of which was an episode-based payment model. See https://www.cms.gov/data-research/research/actuarial-studies/cmmi-model-certifications for additional details. The largest episode-based model prior to CJR-X was the Bundled Payments for Care Improvement Advanced Model, which at its largest had around 1,000 hospitals (https://www.cms.gov/files/document/bpci-advanced-participants-my3xlsx.xlsx), compared to the over 2,000 hospitals that will be included in CJR-X. The actual CJR-X start date is three months later than the proposed start date of October 1, 2027.

² Lewin Group. (December 2025). CMS comprehensive care for joint replacement model: Performance year 7 evaluation in-depth report. Centers for Medicare and Medicaid Services. Retrieved August 14, 2026, from https://www.cms.gov/priorities/innovation/data-and-reports/2025/cjr-py7-annual-report.

³ For more information on the specifics of the TEAM model, please refer to the Milliman article, “The next generation of Medicare bundled payments: Considerations regarding TEAM,” available at https://www.milliman.com/en/insight/next-generation-medicare-bundled-payments-considerations-team.

⁴ Centers for Medicare and Medicaid Services. (2026, August 4). Medicare program; hospital inpatient prospective payment systems for acute care hospitals (IPPS) and the long-term care hospital prospective payment system and policy changes and fiscal year (FY) 2027 rates; requirements for quality programs; other policy changes; and adoption of updated versions of certain health information technology standards. Federal Register, 91(148), 49570–50461. Retrieved August 14, 2026, from https://www.federalregister.gov/documents/2026/08/04/2026-15833/medicare-program-hospital-inpatient-prospective-payment-systems-for-acute-care-hospitals-ipps-and.

⁵ It is noteworthy that an ongoing CJR-X episode will include a subsequent LEJR that occurs within the 90-day post-anchor window. This differs from the original CJR model, which canceled an ongoing episode if a subsequent LEJR procedure occurred during the episode and initiated a separate CJR or BPCI episode. 42 CFR 510.210(b)(1) (retrieved August 14, 2026, from https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-H/part-510).

⁶ In BPCI Advanced, there were 204,160 LEJR episodes totaling $5.01 billion, with more than 40% of spending occurring in the post-anchor period.

⁷ Lewin Group. (December 2024). Drivers of care transformation: Cumulative findings from the CJR Model evaluation. Centers for Medicare and Medicaid Services. Retrieved August 14, 2026, from https://www.cms.gov/priorities/innovation/data-and-reports/2024/cjr-py6-ar-drivers-transformation.